Boeing and Mcdonnell Douglas Merger Essay Example for Free

Boeing and Mcdonnell Douglas Merger Essay Boeing and Airbus; two longtime rivals fighting over market share in an extremely volatile market due to high research and development costs and constant changes in market demand was the cause for Boeing to take drastic protective measures. Boeing which at the time was one of the largest commercial aircraft manufacturer and third largest aerospace defense contractor decided to merge with McDonnell Douglas. McDonnell Douglas also produces commercial aircraft but held much less of the market share than Boeing. The intent of this paper is to describe the search and screening process Boeing used which is broken down in to three categories: legal, financial and operational, discuss the valuation criteria, analyze the negotiation and bidding process and determine what kind of financing Boeing used to secure McDonnell Douglas. Legal Issues When Boeing announced they were planning on purchasing rival McDonnell Douglas, this sparked a great deal of concern not only with the Federal Trade Commission but with anti-trust authorities in Europe as well. â€Å"The belief was that by reducing the markets to only two players, such a merger would so reduce the competition that consumers would be forced to pay more for airline tickets and tax payers would be forced to pay more for jet fighters and space vehicles† (http://www.washingtonpost.com/wp-srv/business/longterm/boeing/boeingtoo.htm). The goal addressing these concerns was to prevent Boeing and McDonnell Douglas from creating a monopoly of the aircraft and aerospace market. A monopoly is a situation in which a single company owns all or nearly all of the market for a given product or service (â€Å"Monopoly†, 2012). The concern in Europe was due to Boeing’s Practice of negotiating exclusive supply deals with major airlines such as Delta Airlines, American Airlines and Continental Airlines that prohibited purchases of Airbus planes (European Union Objects To Just About Everything In Boeing-Mcdonnell Merger, 1997). In the end, Boeing was forced to make concessions to ensure the merger would be allowed to go through. Andrews (1997) â€Å"Boeing agreed not to enforce the exclusive-supplier provisions of those deals, though analysts said that would have little effect on Boeings bottom line† (para. 3). Financial Status The commercial and defense aircraft market is extremely volatile and will change from extreme high demand in one or both commercial and defense to a decline in demand in one or both areas. At the time of this merger, Boeing had seen huge changes in defense spending that caused growth on the commercial side of the aircraft market. For Boeing this was a favorable change due to the fact that eighty percent of their products were for commercial aircraft rather than defense. Rolinitis (1997) â€Å"Although these factors heavily favored Boeing’s make-up, Boeing was still concerned with the severe cyclical swings that the commercial market faces† (Boeing’s View). Boeing’s main concern was to gain market share to better compete with the Airbus which was the second largest commercial aircraft manufacture that held most of its operations in Europe. At this time, McDonnell Douglas was structured exactly the opposite; two thirds of its revenue generated from defense products. Due to severe cuts in defense spending, McDonnell Douglas was consistently losing market share. This situation made an attractive opportunity for Boeing to merge with McDonnell Douglas and seemed that it would work out for both parties; Boeing would gain more market share in European markets and McDonnell Douglas would in essence not have to suffer large losses waiting for defense spending to increase. Operational Status The merger between Boeing and McDonnell Douglas was viewed by most a perfect match. The new company would have operations in the United States and Europe; maintain market share in both commercial and defense aircraft production markets. For Boeing, the only downside is they were forced to give up exclusive supplier relations with three airlines; however that did not seem to have that large of a negative effect on the new organization. Rolinitis (1997) â€Å"The merged company will have approximately 200,000 employees which included the recent Boeing merger of Rockwell aerospace and defense units. It will operate with estimated 1997 revenues in excess of $48 billion, making it the largest integrated aerospace company in the world† (The Deal). Valuation Criteria Negotiations Financing Conclusion The air craft production industry is one of the most volatile industries due to ever changing supply and demand and high research and development costs. As the air craft market changed moving towards more commercial demand and declining defense demand, it became in the best interest for Boeing and McDonnell Douglas to merge into one joint company making them the largest commercial and defense air craft production company. There can be quite a bit of issues concerning the merger of two companies; some concern what is in the best interest of one company and others may include the concern of not violating trade laws. The purpose of this paper was to describe the search and screen process and issues; specifically legal, financial, and operational status, discuss the valuation criteria, valuation and negotiation and bidding processes of the merger between McDonnell Douglas and Boeing. References Andrews, E. L. (1997). Boeing Concession Averts Trade War With Eurpe. The New York Times. Retrieved from http://www.nytimes.com/1997/07/24/business/boeing-concession-averts-trade-war-with-europe.html European Union Objects to Just About Everything in Boeing-McDonnell Merger. (1997). Retrieved from http://www.prenhall.com/divisions/bp/app/phblaw/html/august/august5.html Monopoly. (2012). Retrieved from http://www.investorwords.com/3112/monopoly.html Rolinitis, S. (1997). The Boeing McDonnell Douglas Merger. Retrieved from http://economics.illinoisstate.edu/dloomis/eco320/downloads/papers/steve.PDF

Business Report Essay -- GCSE Business Marketing Coursework

Business Report EXECUTIVE SUMMARY Fantasy ROCK will be a small business that provides entertainment and leisure activities. We will sell a variety of foods and beverages. Our menu will contain many dishes. A large appetizer section, Steaks, Chicken, sandwiches, hamburgers, soups and salads will be our specialty. We will sell several types of beer on tap and in bottles. A few micro brews such as Fat Tire Ale, and Honey Brown larger will be kept on tap, as well as the cheaper larger brands such as Budweiser and Coors. Several large screen TV’s will be placed through out the cafe’. They will be playing an assortment of things. Our main TV’s will be playing rock videos that go along to the music we are playing. Others will provide sports coverage of big games going on. The intent of the big screens is so that as our customer sits we allow giving them something to look at. We want to provide them with entertainment. Rock music has an effect to energize and lift a person’s spirits. We want customers to enjoy themselves. A sound system will be installed to heighten our music listening. Fantasy ROCK wants to provide high quality sound yet minimizes costs. Purchasing a surround sound system by Bose speakers systems can do this. Fantasy ROCK has great potential to expand. Our biggest competitor is Hard Rock Cafà ©. How we plan to differentiate ourselves is we want to provide a more of a local business atmosphere. We want our employees to get to know our customers and welcome them by name as they walk in. The market in which we are entering is wide open. All restaurants are competition to us yet because of our atmosphere in providing entertainment and leisure we become unique. Currently Fantasy ROCK has no expansion plans. As profits come in and our business base grows future planning will be done. MISSION STATEMENT Fantasy ROCK strives to be the premier rock music restaurant in Phoenix. Our goal is to be a step ahead of the competition. We want our customers to have more fun during their leisure time. We provide more television with ROCK videos and sports coverage than anywhere else in the Phoenix area. We provide a state-of-the-art Bose sounds system to deliver the highest quality sounds possible. We Combine menu selection, atmosphere, ambiance, and service to create a sense of â€Å"place† in order to reach our goal of over-all v... ...box $12.45 Dr. Pepper 8 gallon box $12.45 Sprite 8 gallon box $12.45 Iced tea 8 gallon box $12.45 Mug Root beer 8 gallon box $12.45 Malt 4 lb box powder $8.65 Chocolate syrup 2 gallons $3.65 Cheddar Cheese 80lbs $56.98 Mozzarella Cheese 80lbs $58.90 Parmesan Cheese 20lbs $28.67 Dressings 5,000 assorted $22.45 Fresh Bread 6 loaves $3.75 Macaroni Salad 2 gallons $27.65 Potato Salad 2 gallons $12.87 Pepperioncinis 5 gallon drum $25.67 Salami 20lbs $22.98 Pepperoni 20lbs $19.87 Garlic 1 lbs $2.89 Butter Large tub $5.67

What Is the Need for an External Audit

The need for an external audit in the case of companies arises primarily from the existence of split-up of ownership from control. When control is shared an audit report will be needed in order to ensure that all the partners or be it shareholders are on the same page as the managers (the ones who will be controlling the company) and know what has been happening in the company, what is happening at present and what can be expected to happen in the future in order to increase returns in the company.The case of an owner controlled company is different as usually the manager will be working in the company and will be aware of everything that will be taking place and will not need an audit report to find out what is going on. Since the owner is alone in decision making, he knows about all the decisions that need to be made and will not find out through an audit report that maybe the company has decided to expand and open a new branch using the accumulated or retained profits.The audit in volves the client’s staff and management in giving time to providing information to the auditor. The auditors need part of the staff’s time as they will not know where the proprietary’s accounts are kept and in which way they are filed. To gather all the information that the auditor will use in making his audit report he has to get it through staff. Since most owner controlled companies are very small and the staff members are few, it will make it difficult for the Professional auditors to plan their audit to minimize the disruption which their work will cause.The audit might end up inconveniencing other stakeholders such as customers because service can become slow as one of the staff members will be assisting the auditor, giving him all the documentation that he needs and accompanying him around as he investigates the internal control measures that have been created in the company to see how effective they are. Application to lenders/financial institutions for finance may be strengthened by the submission of audited accounts.However some financial institutions, a bank, for instance, is likely to be far more concerned about the future of the business and available security, than by the past historical accounts, audited or otherwise. Audited accounts cannot predict the performance of the company in the future, which is the information that the Bank will be trying to find out. Therefore; audit reports are not an issue of paramount importance, especially in owner controlled companies.Not all owner controlled companies need to be audited. Auditing of companies does not depend on the type of ownership (that is, sole trader, partnership or co-operative), but it mostly depends on the size of the company at hand. There are laws that have been made in the U. K that exempt certain companies especially the small ones and the owner controlled ones from being audited. Instead of following all audit requirements, the owner controlled companies can subm it shortened accounts.The main differences that can be produced under the banner of abbreviated accounts basically mean that an owner controlled company does not have to include a full balance sheet, profit and loss account or directors report which would normally be required by Companies House. The owner controlled company is still required to submit a shortened balance sheet together with notes that explain the year end balances shown in the balance sheet. Under the audit exemption rules the year end accounts for an n owner controlled company do not have to include an auditors report.When an auditor has prepared the accounts and submits a special audit report that report should state that in the auditor’s opinion the abbreviated accounts are being submitted in accordance with the appropriate section of the Companies Act. To qualify for being able to file shortened accounts a small company should satisfy at least two of three conditions. The three exemption conditions prior to April 2008 were that annual turnover is less than 5. 6 million pounds, balance sheet total is less than 2. 8 million pounds and the average number of employees is less than 50.Where the financial year started after April 2008 the parameters increased to, annual turnover less than 6. 5 million pounds, balance sheet total less than 3. 26 million pounds and average number of employees less than 50. When an owner controlled company satisfies the audit exemption parameters it can maintain that audit exemption for a full financial year afterwards even if the parameters were exceed in that following financial year. There are benefits in submitting abbreviated accounts as simpler and easier accounting records can be maintained reducing time spent on accountancy work.In addition although potential suppliers and financial institutions may require details of the year end financial accounts it is acceptable not to publish full details. In China, Owner controlled companies have an exemption f rom the audit and this gives management for smaller companies some newfound flexibility, Alyssa Martin says. Companies may not have to produce as much documentation or perform as much testing to produce management’s assertion as they might have had to produce for the sake of the audit, she says. They can use other measures, like ongoing monitors or their own personal experience, to assess internal controls when they don’t have to have the external auditor auditing their process or leveraging their process in performing the audit of internal control,† notes Weaver’s Martin. Yong Xu, CFO for Jingwei International, says he was grateful to see the audit requirement lifted, even though the company voluntarily produced the audit for its 2009 financial statements and is planning to have the audit again in 2010. Jingwei International is a China-based technology services provider listed on the stock exchange and is owned controlled.However while the recent legislat ion exempts smaller companies from the audit of internal control, it doesn’t relax any of the requirements for companies to establish and maintain an effective control environment or to report on the effectiveness of controls, says Alyssa Martin, an executive partner with audit firm Weaver. That’s because the Dodd-Frank bill does not exempt smaller companies from Section 404(a), which is the requirement for management to produce its own report on the effectiveness of controls to mitigate errors in financial statements. â€Å"It doesn’t really change the role of management,† says Alyssa Martin. They still have to understand the design of internal control and assess the effectiveness. †Ã¢â‚¬Å"It’s not a cake walk. If you’re not documenting anything or doing anything, you’re not following the SEC’s guidance. †Ã¢â‚¬â€Jim DeLoach, Managing Director, Protiviti. Owner controlled companies should audit their accounts as th is reduces the Risk of Fraud. A number of factors affect the risk or exposure to loss from fraud, and some organizations suffer more fraud than others. The incidence of fraud in books of account is distributed unevenly. Some industries, some companies, some occupations, and some persons are higher risks than others.If accounts are being constantly audited, employees will comply with the regulations and do the correct thing; on the other hand, this can become a motivating factor in the case of employees as they know that changes in the company for better that have been initiated by them will be recognized. Many companies have embraced voluntary environmental audits, commonly known as self-audits, as a valuable business resource. Consultants and experts agree that the practice can be of enormous benefit to enterprises in all types of industries, for it addresses so many facets of a company's operations.For example, Barbara Ceizler Silver, author of Environmental Self-Audit for Small B usinesses, described the self-audit as a valuable â€Å"diagnostic tool† that can be used by companies seeking to identify and address compliance problems relating to air, water, land use, solid waste, and hazardous materials prior to submitting formal permit applications or other business processes. The practice of voluntarily checking compliance with environmental regulations through the practice of self-auditing has garnered considerable support from state lawmakers as well. As of 2000, environmental self-audits receive significant legal protections in 26 states.The body of law in these states maintains that companies can voluntarily test for violations and correct all previously undetected problems without legal penalty. Companies that report violations avoid financial penalties and receive additional time to rectify problems. Most significant of all, the results of self-audit tests and programs in these states receive significant legal protections from public disclosure The advantages of an audit report in owner controlled companies may be there, but the disadvantages far outweigh the advantages and therefore I agree with the statement that owner controlled business should not have audit reports.This is because this will be a large and unnecessary expense to the company and will result in the company spending large amounts on auditing which could have been diverted to expanding the business. There are cheap alternative methods that owner controlled companies can use to manage their companies than auditing their accounts and getting audit reports every year. (1503 words)References Abdel-Khalil A. R. (1983). Why do private companies demand auditing? A case for organizational loss of control. Journal of Accounting, Auditing ;amp; Finance, 8(1), 31-52 Proviti Flash Report on SOX 404(b) July 17 2004.Accounting and Audit Exemptions for Small Companies in the U. K-Terry Cartwright Environmental Self-Audit for Small Businesses: A Quick and Easy Guide to En vironmental Compliance. New York Department of Environmental Conservation, Empire State Development, March 1998. Geltman, Elizabeth Glass. A Complete Guide to Environmental Audits. ABA, 1997. Power, Michael. â€Å"Expertise and the Construction of Relevance: Accountants and Environmental Audits. † Accounting, Organizations, and Society. February 1997. Environmental Self-Audit for Small Businesses- Barbara Ceizler Silver

Converse Target Market Worksheet Analysis - 1625 Words

CONVERSE TARGET MARKET WORKSHEET ANALYSIS GEOGRAPHIC As the earliest sneakers,with over 100 years of history, Converse, a American shoe company, has been considered as one of the most popular shoe companies in the world. At present it has covered more than 125 countriesï ¼Å'which have selling Distributor, Licensee, or Agent, over The Seven Continents. Set up in America and soon pop in Europe . Following the war and Market saturated in America and Europe, also the Asia Rising, Converse entered Asia with a strong effective on sports market during 1970s-1980s, At that time ,Converse first focus on Japanese because its rapidly rising. In 1993, as people started recognizing China as a country that has a huge potential†¦show more content†¦So young people will never get boring with it, for the high school students, they will care about the colors and styles, so they may even compare with each others or they find that some stars they like are wearing a Converse shoes so they may go to the stores and buy it. F or the college students, they will be more focus on the quality and comfort because they often use their pocket money carefully, they may want a shoes that can wear for a very longtime. For most of the consumers in Converse are like fashion items and they can accept the new things very quickly. Behaviorial 1,The Self Actualizing Buyer Even though These kind of buyer only represents about 5% of the customer market, they are still important because they know exactly what they want, exactly the features and benefits they are seeking, and exactly what price they are willing to pay, which means they are somewhat selective about what they want. They purchase Converse because they do like this classical American brand with fashionable designs and styles,maybe they are also returning consumer.Therefore Converse will attract these kind of buyer because its price is quite reasonable and is comfortable to wear. It might takes them more than a week to make decision to buy it since they are high ly selective and they might do some kind of research on what they want.They could purchase products in exclusive storesShow MoreRelated THE IMPACT OF KNOWLEDGE MANAGEMENT PRACTICES IN IMPROVING STUDENT LEARNING OUTCOMES65118 Words   |  261 Pagesthoughtfulness and scholarly insights have contributed to my thinking and writing. I will remain forever grateful for the advice and encouragement he provided from start to finish. Secondly, I would like to thank Dr. Remedios for verifying the statistically analysis section of my thesis. I am also deeply grateful to those professors who have taught on the EdD (Singapore) Programme, whose teaching has stimulated many early thoughts and ideas. I wish to acknowledge the contribution of the many hundreds of studentsRead MoreProject Managment Case Studies214937 Words   |  860 Pagessituations, but keep in mind that the larger case studies, such as Convin Corporation and The Blue Spider Project, could have been listed under several topics. Several of the cases and situations have seed questions provided to assist the reader in the analysis of the case. An instructor s manual is available from John Wiley Sons, Inc., to faculty members who adopt the book for classroom use. Almost all of the case studies are factual. In most circumstances, the cases and situations have been taken from